Ships sold online, cautious companies sail traditional routes

In recent times, websites like VesselsValue have gained market share in providing online ship-selling services

If you were buying or selling a house or a property in the nineties, chances are you browsed through the classifieds section or called out to the nearest broker. And now, that property valuations can be done at the click of a button.

Cargo vessels, sold for millions of dollar, too have moved out of closely-knit shipping community and are being increasingly sold through new age e-commerce tools.

All this has been made possible because of online assistance made available to assess the value of the ship and reach out to buyers. Indian companies though are yet to warm up to them.

“A lot of them have not matured. A broker gives lot more information and a view on the market also,” Anil Devli, chief executive officer, Indian National Shipowners Association told Business Standard.

In recent times, websites like VesselsValue have gained market share in providing these services. However, Indian ship owners still prefer to go to established international names like Clarksons, Simpson Spence Young Global, Jefferson etc.

“It is not to say that Indian brokerage companies are not competitive but there is a view that they engage foreign brokers only. So as a seller one doesn’t want to have such an indirect deal,” Devli added.

In the boom years of 2006-2007, when shipping companies were busy placing new building orders, companies weren’t really bothered about the second hand sales. However, reeling under oversupply ship owners are seeing more value than ever in the second hand market. Currently a five year old container vessel of 3,00,000 dead weight tonnage is available for $80 million as against $108 million in 2010.

While some are selling because they don’t the finances to hold on to their assets or due to lack of trade. Many companies feel this is a good time to acquire vessels since the prices are almost 50% lower compared to the peak time of 2010.

Indian shipping industry has come a long way from the dark and dreary days when to sell their own asset permission had to be taken from the Ship Appraisal and Licensing Committee which was a long and tardy process.

The government body would meet just once in a month and any company wanting to sell or buy a vessel internationally had to get the proposal passed by the Committee members. It was done away with post liberalization and a direct permission from Reserve Bank of India started to be taken.

“Ships are always sold on contrarian view. Because one party thinks markets would become better and the other thinks it will tank. It used to be very difficult to explain this to government officials who would deliberate on each deal for months and no one waited that long ,” a senior shipping company executive said.  

Once a company decides that it wants to rent or sell the vessel for further trade or scrapping, the first step is valuation. Thereafter the buyer can get third party inspection of the vessel done, which includes engineers who examine the upkeep of the vessel, the dry dock requirements (repair).

Since a ship is a mobile asset, bunker, the date and area of delivery is also a factor in cost. If a ship is being delivered at a place where there is no cargo, then cost would go down. After the ship changes hands, the old crew is repatriated and the new flag (if it is sold to another country) takes over.

Vessel Type	Age (in years)	2010 ($ million)	2013 ($ million)
0.3 mn DWT*	5	108	80
Tanker Vessel	10	60	35
1.7 mn DWT	15	23	12
Container Vessel	10	18	9

* Dead weight tonnage

^{Source: Clarckson}